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Published: July 20, 2010
I'd been planning to write something about Apple's (Nasdaq:
AAPL) new iPhone 4 for some time, but I wanted to wait until
I actually got mine, which finally happened last Thursday.
So far, so (mostly) good with the iPhone. I was previously a
Verizon (NYSE: VZ) customer with a non-smart phone, which
served me well over the years. But there came a point when I
just felt I needed an iPhone, to check email on the go and to
get directions, among other functions. I also love that it has a
camera -- one less gadget for me to carry around.
So far, besides my one dropped call (the reason for the "mostly"
good), I haven't experienced any of the technical difficulties
reported by consumers and media outlets. According to
Consumer Reports (among others), a problem can occur when
holding the phone in a certain way that blocks the cell signal.
When I purchased my iPhone, I bought the recommended bumpers to
avoid any catastrophes if it should fall and to get a better
grip on the thing -- it's slippery! And apparently by using
those, I'm avoiding any of the loss of signal problems.
However, Consumer Reports isn't happy with the bumpers as a
permanent solution and is not officially recommending the phone
(despite calling it the best smart phone on the market, go
figure!) because of the problem. Instead, the magazine is urging
Apple to fix the phone free of charge.
Despite these issues, there's no doubt that Apple has the
hallmarks of a good growth company. It has an incredibly popular
product (1.7 million iPhone 4's sold in the first three days)
and a seemingly endless stream of revolutionary, innovative
products (iPod, iPhone, iPad).
But the stock already had a great run last year (and at other
times in its history) and it has chopped around a lot since the
stock market correction began in May. It's also possible that
the stock is already too well loved and thus will never again
realize the monster gains young, unknown growth companies will.
In that vein, today, I'm going to recommend a stock that's a
beneficiary of the smart phone market, but doesn't actually make
any phones or any of the components in them.
The company is American Tower (NYSE: AMT) and although
it's based in Boston, it has a wide presence in the U.S. and
around the world. It was recently recommended by Cabot Top Ten
Weekly Editor Michael Cintolo, who wrote:
"The iPhones, Blackberries, flip phones and candy-bar cell
phones of the world share one big requirement: They all need
cell phone towers to get their signals. And the continuing
competition among the world's cellular service providers to
extend and upgrade their networks is the ruling reason behind
the success of American Tower. Massachusetts-based American
Tower has a global portfolio of about 30,000 wireless and
broadcast communication sites, with more being developed all the
time. These sites range from mountain tops to rooftops, and
stretch across the U.S., Mexico, Brazil and India. The company
has just announced that it will begin operations in Chile soon,
having just inked a deal to acquire up to 287 tower sites from
Telefonica Chile. Revenue growth is rising at an increasing rate
(up from +10% in Q4 to +12% in Q1) and earnings were up a
notable +72% in the most recent quarter. With a customer base
that includes AT&T (NYSE: T), Sprint Nextel (NYSE: S),
Verizon Wireless and T-Mobile, American Tower is benefiting from
the boom in the wireless sector.
AMT isn't a rocket shot, but the stock is pushing out into
multi-year highs. The stock declined in an orderly way from its
January high of 45 to support at 38 in May, then staged a strong
rally back to 46, completing a cup pattern. A two-week
correction to 43 put a handle on the cup and the stock then
soared to 47 on good volume. The stock has now corrected to
support at 46. AMT is liquid, and a little sideways action would
make a good buying opportunity.
-- Elyse Andrews
Editor
Cabot Wealth Advisory
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